Being Successful in Today’s Music Business: Working Backwards

Working as a producer/engineer in the music business, I see (and hear) a lot of things when it comes to indie music and recording. One of those things, more often than not, is a conversation that goes something like this:

Band: “Hey, my band would like to book some studio time and record our next album.”Me: “Great, what are you looking to do?”Band: “Well, we have about 5 songs written and are working on some more. We’re looking at getting into the studio in about a month or so and we should have the other songs worked out by then.”Me: “Okay…how much studio time are you looking to book?”Band: “We’re not sure yet. We’re all chipping in and the drummer is borrowing some money from his uncle.”Me: “Do you have a budget you’re working with?”Band: “No, we’re just going to see how much money we can scrape together and go from there.”

While everyone is not guilty of this exact conversation, there are certain underlying elements that we’ve all been guilty of at one time or another. On the surface it seems pretty innocent. But let’s break it down and you decide whether or not this makes sense.

First of all, if you only have ten songs, what are the chances that each of those songs are individually great? Most successful artists write 20 or 30 songs before going into the studio. Then, they start demoing the songs, performing the songs live, interacting with the producer, and establishing an idea of what’s working and what’s not. Then the song list gets whittled down from there.

Next, studio time = money. So many artists walk into a studio, record a project, and then sit back and decide what to do next. This is highly ineffective. This is also where I suggest saving everyone time and money by doing what I call “Working Backwards.”

Start by asking these questions:
• How many fans do you have?
• How many shows did you play last year?
• If you’ve a released a CD in the past, how many CDs (or downloads) did you sell?
• How many shows do you play a month?
• How many CDs do you think you can sell at each show?

Let’s examine why these questions are important. Let’s say that based on your answers to the above questions, you forecast that your act can realistically sell 1,000 physical CDs at your shows in a year, and another 500 in digital download sales. Assuming you’re netting $10 a CD and clearing the usual 60% (average) on the digital, that leaves you with gross sales of $13,000.

Now, let’s also assume that you want the time and money that you put into recording the CD to turn a profit. Again, by way of an example, let’s call that profit a 50% return on your investment. In other words, you want to make back 150% of what you put into making the CD. This means that if you have forecasted a gross sales of $13,000 and you want to make 50% return on your investment, then you can’t spend more than $9,750 recording and manufacturing the album. This means that has to cover CD replication, graphic design, mastering, promotion, etc. Roughly, those things could eat up $2,500, leaving you roughly $7,000 to burn on studio time. Now you have a budget.

Don’t let the card rate on recording studios scare you. Hook up with a producer or engineer you’d like to work with and go from there. I get calls all the time from artists and bands that are working from a budget and most of the time we come up with a win/win relationship that gets the project done within their budget and meets their needs. A seasoned producer knows the rooms, the studio managers and everyone else you’ll need to get the project done. That’s part of their job!

So, why is all of this important? If you’re like most artists and are scraping together money from multiple sources and borrowing money from your friends and family, then it’s important to be able to show a formula, a process, or a business plan for what you’re doing with the money – not only for them, but for yourselves.

Does everyone plan this way? No. Do successful bands/artists plan this way? Someone on their team most certainly does. Should everyone plan exactly like this? Not necessarily because every situation is different. The above example simply illustrates that by starting with the end goal and working backwards from there can be a lot more effective than just spending money with no real end in sight.

Mark Hornsby is a music producer and audio engineer based out of Nashville, TN. For more information, check out www.markhornsby.com.

27 thoughts on “Being Successful in Today’s Music Business: Working Backwards”

As a songwriter who does not desire to be a performance artist, what’s the potential for income with placement in the movie, film industry? I know it differs but is there an amount that the market has determined?

As mentioned by Bobby, the digital download (and illegal download) age makes budgeting very iffy.

The formula you posted in this article is very good to use and makes a lot of sense.

As mentioned, asking the local sound guy at a big nightclub (for live shows) would be a good place to get a reference, and also, when shopping for studios to record your CD, ask them for examples of previous artists they have worked on. This will definitely give you a clear idea of what they can do with your music.

Budgeting for anything is a never a “set it and forget it” formula in any aspect of today’s economy. You make a plan and adapt as needed. The goal is to get the wheels turning in the direction of progress and hopefully develop a roadmap to get there, which in turn will help eliminate the wasting of some much needed capital.

This post is concise and dead on point! Many artists think only of their music and fail to acknowledge that, in order to connect with their audience over the long term, they must think of their music as a business that has at least a chance of turning a profit. Here is a well stated formula that points toward that goal. Well done! http://www.DIYBluegrassBiz.com

Like the article. This also depends on the reason you want a CD out. For me, I wanted material I could begin to license to film and TV, and also to start handing around to build a fan base. Thus creating demand, before really going in on other projects. And with my family, (wife/2 kids), I’m taking more of a behind the scenes approach now, and will most likely begin putting resources from my full time job, and wedding band gig into another artist that I believe in, who has the time to record, perform, and establish a solid career. Don’t get me wrong, with the new online tools available, I can still play “Live” online shows from time to time, but I’m comfortable with my career going in this direction, because I can still write songs.

Kevo,
Statistically the actual download sales figure for the norm ranges from zero sales to one sale not the highly optimistic 500 download estimation. Only a very small minority of artistes can claim any sales at all.
Patrick Landreville : Bald Ego Music (ascap) (nmpa/hfa)

Great points & advice here, however a reality check on ‘CD sales’ in the age of illegal downloading will reveal that prediction of sales & planning for such is a very inexact science, so most indie projects are purely speculative & often done just to get it done. Producers, performers & everyone for that matter need to pull together & in my experience (30 years as a pro muso & 5 albums) an answered phone or email inquiry would be nice or a promise kept – please refer to Puppetbox’s point below.

While true, I find that every artist I work with who is truly in touch with their audience and demographic are very in touch with what their fans will and will not react to-both on a financial and creative level. On a larger scale, look at Phish. Targeted live performances and product release based on the track record of their buying demographic.

I know that we even have to add our airfare, rental cars, gas, royalties, motel rooms etc into the cost of our cd. That can almost double the price of the album. We don’t start on the next cd until we reach payback on the previous album. I always have a budget but usually it goes over just a little. Now we have 4 albums turning an income to continue funding our future projects.

I like this down-to-earth practical approach. One question or request from readers or the author. How do you chose a producer? We’ve asked a few producers who have worked with artists we like but never get a response. Next we’ve talked to producers who advertise and the reaction seems to be “I’ll tell you whatever you want as long as you pay me.” We have a budget and finished songs, but want to work with someone who brings more than some plug-ins. Even if our music sucks they should have original ideas right? myspace.com/puppetbox

Hey there. The right producer for your project should almost immediately have specific ideas to enhance your music after hearing 2 or 3 of your songs. The right producer won’t be afraid to offend you slightly in his/her critique, because they are confident that they can convince you to trust them with your vision, and that you will be amazed with the results.

Depending on your budget you can start with asking your local sound guys where you play. One of them will invariably know a local producer engineer or two. What are other local bands doing, who do they use? Or straight up start calling studios and asking questions of the locals. Yeah pretty much producer auditions, get a list and evaluate.

Creatively speaking we were lucky… we’ve received and continue to receive airplay somewhere in the world for all 22 songs on our first 2 releases, which also happened to be the first 22 songs we wrote together. Cd #3 will be a different story; there are now many more songs to choose from than will fit on the release. However, we were unable to tour or play live much to support either of the first 2 releases, and we know that would have made a difference in the actual sales. So for all 3 I’m afraid that budget = whatever it ends up costing, regardless of profits.